Friday, March 18, 2011



An earthquake levy is still a good idea, but not now

Duncan Garner's latest blog post suggests that the government should stop borrowing and pay for the earthquake now with an earthquake levy. I've supported this idea in the past. But after an online discussion with Keith Ng and others a couple of weeks ago, I've changed my mind somewhat. A short-term earthquake levy targeting the rich is absolutely the fairest way to pay for the immense cost of rebuilding Christchurch. But given the weakness of the economy, now is probably not the best time to impose it (raising taxes in recessions is generally a bad idea, as any Keynesian will tell you). So, its better for the government to borrow in the short-term, and commit to imposing such a levy later (in a year or two, when things have hopefully recovered a little) to cover the costs.

Meanwhile Garner has this to say about the prospect of cutting Working for Families at the top end:

it won't save huge money. A few hundred millions dollars at most. That won't pay for Christchurch.
"A few hundred millions dollars"? Try one. And there's no way of getting that without making the ordinary families everyone agrees should get WFF worse off.

It would be nice if journalists checked their figures before mouthing off. Garner has done the public a tremendous disservice here, and it is a discredit to his profession.